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Microsoft-Activision Merger May Reduce Competition, According To A UK Watchdog

Microsoft-Activision Merger May Reduce Competition, According To A UK Watchdog
According to a UK watchdog, Microsoft's proposed acquisition of Activision Blizzard could significantly reduce competition in consoles, multi-game subscription services, and game streaming.
Microsoft wants to pay $68.7 billion for the maker of Overwatch, Candy Crush, and Call of Duty.
However, the UK's Competition and Markets Authority (CMA) has stated that its concerns warrant an in-depth investigation. Microsoft stated that it was ready to collaborate with the CMA on the "next steps."
If the deal goes through, it will be Microsoft's largest acquisition to date.
Activision Blizzard's games are among the most popular in the world. However, it has previously been accused of allowing a toxic and sexist workplace culture.
The CMA stated in its ruling that it was concerned that if Microsoft purchased Activision Blizzard, it would harm competitors "by refusing them access to Activision Blizzard games or providing access on much worse terms."
"Microsoft could use its control over popular games like Call of Duty and World of Warcraft post-merger to harm rivals," said Sorcha O'Carroll, senior director of mergers at the CMA.
"If our current concerns are not addressed, we plan to explore this deal in an in-depth Phase 2 investigation to reach a decision that works in the interests of UK gamers and businesses."
This decision brings the CMA's initial investigation, known as Phase 1, to a close. In Phase 2, the CMA appoints an independent panel to conduct a more thorough investigation of the transaction.
If the CMA determines that a merger is problematic, it will take steps to mitigate its negative effects. This could mean halting the merger or allowing it to proceed but only under certain conditions.
Microsoft President Brad Smith issued a statement in response to the news, saying, "We're ready to work with the CMA on next steps and address any of its concerns."

"Sony, as the industry leader, says it is worried about Call of Duty, but we've said we are committed to making the same game available on the same day on both Xbox and PlayStation. We want people to have more access to games, not less." 
Microsoft maintains that Activision Blizzard's expertise in mobile gaming is its primary interest in the planned acquisition.
Phil Spencer, the company's head of gaming, told Bloomberg that "the biggest gaming platform on the planet is mobile phones," an area in which Microsoft lacked expertise.
Activision games are currently playable on both Xbox and rival PlayStation consoles, but the proposed acquisition has prompted some to speculate that more games may become Xbox exclusives.
Smith previously denied this in an interview with the media, saying that "great titles like Call of Duty... will continue to be available on the Sony PlayStation."
He drew parallels with the company's 2014 acquisition of Minecraft, claiming that the company invested in the game and expanded its distribution.
Phil Spencer emphasized this point in a blog post published on Thursday. The proposed acquisition of Activision Blizzard by Microsoft, valued at nearly $70 billion, shook the games industry.
These two are both absolute behemoths, and their union would create a behemoth.
The US tech behemoth, which owns Xbox, has ambitious gaming goals and deep pockets. It owns 23 game studios, including Mojang, the creator of Minecraft, and Bethesda, the creator of Fallout and SkyRim.
Call of Duty, Overwatch, Skylanders, and Diablo are some of Activision Blizzard's biggest hits.
Sony, the owner of the world's best-selling games console, the PlayStation, has publicly stated that it "expects" Microsoft to keep these massive titles multi-platform.
But Microsoft's Phil Spencer says he's more interested in the mobile gaming market right now, and Activision also owns Candy Crush Saga, a simple ten-year-old game that remains one of the most popular mobile games of all time.
It's no surprise that competition authorities are now scrutinizing this transaction even more closely. They must be confident that a merger of this magnitude will not completely devastate the market.
Other countries, in addition to the UK, are conducting their own anti-trust investigations, and Saudi Arabia was the first to approve the deal last month.
Some have pointed to previous takeovers as proof that the deal could result in more new Activision Blizzard games becoming exclusive to Microsoft-owned platforms.
Microsoft successfully purchased Bethesda Softworks' parent company, Bethesda Game Studios, for $7.5 billion last year.
At the time the Spencer said, "some new titles in the future that will be exclusive to Xbox and PC players".
In a tweet, Xbox's Aaron Greenberg confirmed that Starfield, a game announced by Bethesda three years before the acquisition in 2018, will not be released on PlayStation.
Some independent game developers were also concerned that if the deal went through, they would be marginalized in Microsoft's Netflix-like game subscription service Game Pass, as the company began favoring its own titles.
However, Sony, which manufactures PlayStation, has been acquiring studios as well, most recently purchasing game developer Bungie for $3.7 billion in June.

Christopher J. Mitchell

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